The pharmaceutical sector has long attracted the scrutiny of
antitrust authorities in many jurisdictions, mainly over major
patent holders' alleged abuse of market power. As a
manifestation of such scrutiny, the European Commission
("Commission") initiated an inquiry into
the pharmaceutical sector in January 2008 to find out whether
anti-competitive behavior had been responsible for a perceived
decline in innovation and delays in the market entry of generic
products. At the end of a commotion-filled inquiry lasting about a
year and a half, the Commission published its Final Report in July
During the same period, the Turkish Competition Board
("CB") – influenced by the EC
Inquiry and examples from other countries – launched its
own inquiry into the pharmaceutical sector with a decision adopted
on 20 January 2009. Although the CB has not yet shared official
results or interim findings with the public, officials have
occasionally presented – on an informal basis –
the main objectives and scope of this inquiry, as well as the
framework and tools they are using to conduct it.
The main motives behind the inquiry have been declared as:
collecting intelligence on the sector and competition problems
thorough examination of the entire sector;
determining which structural arrangements in the sector prevent
effective competition and, if possible, proposing alternatives;
evaluating the sector in line with changing circumstances and
the evolving market structure.
The CB inquiry focuses on competition issues in the
pharmaceutical sector on two levels: (1) production (competition in
R&D, competition among originators, and competition among
originators and generics); and (2) distribution (wholesale and
retail). To secure a functioning competitive process in the
pharmaceutical sector, the CB deems that competition problems
should be solved on both these levels. Through the inquiry, the CB
aims especially to increase competition and variety in the active
ingredients for which protection has expired, and to eliminate
conditions which distort competition among pharmaceutical
distributors. The CB will be looking into legal obstacles
restraining the growth of competition as well, which means that by
the end of the inquiry, the state may also be identified as a party
responsible for some of the sector's problems.
To achieve its objectives, the CB intends to carry out an
in-depth examination into pricing and repayment, entry conditions,
distribution channels and tender procedures. The CB is paying
particular attention to the issue of market entry, and has marked
out difficulties faced in entering the market and the unnecessary
extension of protection terms as paramount among hindrances to
competition in the sector. In this regard, as part of its inquiry,
the CB intends to tackle the question of how to encourage the entry
of generics upon expiration of legal protection.
Further, the CB aims to assess the effects on competition of the
reference pricing system and other pricing regulations. To that
end, the effects of the Decree on Pharmaceutical Prices (in force
since 4 December 2009) are also of interest to the CB as part of
the inquiry. In addition, the repayment mechanism stands out as one
of the main elements of competition in the sector, and its capacity
to affect competition between sector participants is also covered.
In this regard, the CB poses the question of whether the selective
repayment lists have any positive impact on competition between
companies and between pharmaceutical products, and whether this
system is applicable in Turkey.
With regard to competition law infringements in the sector, the
distribution channel has been the area that has kept the CB
busiest. Through the inquiry, the CB will in particular be looking
for answers to how competition and efficiency can be enhanced at
the retail level, and what kind of financial adjustments should be
made in the retail sector to increase competition in the
manufacturing sector. The inquiry's agenda also includes the
question of how pharmacy associations should be positioned in the
Tender procedures are also of concern to the CB, as tenders are
the procurement method of hospitals, which, though accounting for
only 10% of total purchases, host a significant degree of
promotional activity. Not surprisingly, therefore, ways to improve
the competitive environment in tenders feature among the
In sum, the CB inquiry is multidimensional and does not focus
solely on market entry. Rather, it aims to tackle all factors,
including regulatory, which may negatively affect competition among
pharmaceutical brands. Turkey's inquiry thus seems more
comprehensive than its EC counterpart, which has focused primarily
on market entry issues, and in particular on the entry of
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